1. As India’s Largest retail NBFC what is the strategy for growth for Shriram Finance?

We are India's largest retail NBFC, with Rs 1.77 trillion in assets under management as on December 31, 2022. We have successfully combined the product range of the two entities - Shriram Transport Finance Company (STFC) and Shriram City Union Finance (SCUF) in the merged entity of Shriram Finance Ltd. The merger has brought synergies in our business operations and optimised human resources. We are focusing on strengthening our geographical presence across the country by penetrating deeper into the markets and offering our diverse product line to customer segments nurtured by us over the last four decades. We are a market leader in Commercial vehicle and two-wheeler lending and shall continue to remain. Our growth strategy is to focus on small businesses in India through various loan products to support their growth journey, thus enabling us to become a market leader in MSME lending too. The long-standing data base and customer reach through empowered employees is helping us establish a stronger foothold across India.

2. How do you intend to become a market leader in MSME lending; what is your strategy and how do you intend to build your business?

The Indian MSME sector has a wide funding gap with a large potential to grow. The recent estimation of the gap is around Rs 25 lacs crores. Our focus and products are designed to cater to micro and small businesses, and we understand their pulse and priorities. India has entered its golden decade, with entrepreneurial interventions including Digital India, Make in India, Skill India movements, etc. India is one of the few countries where entrepreneurship is appreciated and encouraged by the society that creates huge opportunity. Many of our customers possess limited or negligible formal credit history. Our branch employees are highly skilled, represent the local community and understand the customer needs in their geography. They handhold the customers through their loan journey and provide a helping hand in enabling the business to grow. Moreover, with the adoption of digital tools, we are making it easier for our customers to apply for and obtain loans. We aspire to create a loan delivery ecosystem that optimally blends human touch and digital technology.

3. What is the customer acquisition strategy for Shriram Finance in rural and semi-urban India?

We have been focusing on non-metro customers for a very long time and over 80% of our branches are in rural and semi-urban India that has created reach and access. The focus of both the central and state government is to provide better infrastructure and civic facilities to all villages, in the form of road, electricity, drinking water etc and that would create local entrepreneurship for manufacturing, trading and services. We have hired and trained locals at our branches on our product offerings and we also provide financial advice since the locals are often not financially savvy. We work with the village panchayat leaders who also help us in our outreach. Once we have forged a distribution path into a region, we then focus on creating a hub and spoke model for clusters of villages within the region to drive delivery efficiencies.

4. What is the rural market demand? Are you seeking more penetration for expansion?

Rural markets are growing faster than ever with rising wages expanding demand and higher consumption. Demand in the countryside has already begun to outstrip demand in the cities. So the demand is clearly there in these markets. Shriram prides itself in serving semi-urban and rural India. We intend to penetrate deeper into rural India, as we believe it contributes significantly to the economy and has great potential. We will use the digital + physical model to grow and nurture customers.

5. Shriram Finance’s largest business line is commercial vehicles, but how will other verticals pan out in the next 5 yrs?

Shriram started its lending business through truck financing in 1979 and the focus was to lend to individual truck owners who normally prefer to buy preowned trucks. The trucking operations has an advantage being part of the national logistics system, which is directly linked to the nation’s economy and that provides us an edge as an earning proposition. As the economy expanded rapidly, with better road and connectivity financing to other related assets like farm equipment, passenger transportation, personal mobility like two-wheeler and four-wheeler became part of our DNA easily. As the governments infra spending increased, the demand for construction related vehicle/equipment became part of our business model. The gold financing is basically creating easy access and convenience that also became part of our business and has a huge potential to grow across the country. The Shriram group’s earliest business Shriram chits which started in the year 1974, functions like a cooperating lending platform for borrowers and savers and many of the borrowers were MSME borrowers. The team has a fair degree of knowledge on cashflows and working capital requirement of MSME businesses. These understanding, experiences and knowledge helped us to start direct lending to MSME business in the southern part of the country and now with a nationwide network it is easier to scale this across the country. However, we would be careful enough to go step by step, understanding each of the business, geography and depend on the skill set of our local team while scaling it All India.

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Umesh Revankar

Shriram Finance is focused on being the market leader in each and every business we do